The president of TSL Marketing David English discusses his next topic of the Channel Marketing Series in the embedded video below. This weeks topics dives a bit deeper into the marketing numbers & possible scenarios that one could see when managing a channel partner(s). Have a quick look at our second video of the series Channel Marketing Strategy - Measuring & Analyzing Results. You can find other videos of the series on our resources page here.
David has 20 years of marketing and channel marketing expertise, having provided marketing training workshops, marketing consultations, and lead generation programs. Also, David is a regular contributer to the TSL Marketing Blog MarketNow. You can read David's articles by clicking the link.
We hope you enjoy Channel Marketing Strategy - Measuring & Analyzing Results.
A revised transcript has been provided below.
Channel Marketing - Measuring & Analyzing Results
Hi, Thank you for joining us today to talk about channel marketing strategy, measuring and analyzing channel marketing results. This is part of a series we have on channel marketing strategy. What we're going to do today is we are going to dive deep into analyzing results from four sample partners and talk about what we may learn from the numbers and where the numbers may mislead us for each of these examples.
Marketing Oriented Pipeline & Marketing Oriented Revenue
So let's jump into it. Alright, partner number one. This will be the first partner we're going to look at. The first two numbers of this partner that we'll look at are marketing oriented pipeline and marketing oriented revenue. So this example the partners generating fifty times the investments, so 50x that you invested in them in pipeline. So you gave them a dollar, they generated $50 of pipeline and then in revenue you gave them a dollar, they generated $10 in revenue back to you (4 Ways to Increase Revenue Through a Partner Channel).
At first glance, we look at this and say wow! This is great, let's invest as much as we can in this partner. They're generating revenue, they're generating pipeline, let's keep going. Like with everything in marketing a little knowledge is a dangerous though okay, so we want to dive a bit deeper into this number.
The next thing we want to add on, that we think these first two metrics are very important don't get me wrong. We want to keep these metrics, we always want to analyze them and channel marketing. But, we want to add in total revenue growth of the partner. The total businesses that they're doing with you. And, in this case partner one actually decline their revenue with you by 15%. You might say "well how is that possible". They're doing great in a channel marketing perspective, but they're declining in revenue. What could be the cause of that?
There may be several things that we would want to dive into and find out if these could be the root causes. First, they may be losing customers after they sign up at an alarming rate and they may need better support, post-sales support. That's certainly a possibility. A second possibility is that they're just really good at coding. So, some partners are bad coding and some partners are really good at it. They've got the system's down to ensure that everything they touch gets coded correctly into the system. So they might be really good at that. A third could be that they're actually marketing to their existing customers. Which you would expect to have very high rate and if they were for example maybe they're taking customers to a ballgame or event. They bring in the existing customers, the customer subsequently buys more product, they were probably already were going to buy, not that the event wasn't useful. But, that they were going to buy and they get the revenue this way. That may actually then be a bad number that may not be a great number for install based marketing. That might be too low. Whereas net new it looks really high. Those are some possible scenarios now let's take a look at partner number two.
Channel Marketing & Total Revenue Growth
Alright partner two, this partner is only generating thirty times pipeline which isn't a bad number, but in comparison to this one at 50, it is much lower. They've generated five times the revenue, much lower than this partnership. So if we looked at just those two, we might think to ourselves, you know what lets invest all our dollars with this partner, or more here and less here.
When we add in the total revenue growth we see this partner is actually growing at 30%, where this one is declining at 15%. So we ask ourselves how's that possible. If we're generating less closed business here, how it possible we are generating more revenue? Well, let's dig deep and figure out what are the different scenarios that could cause that.
The first scenario might be that this particular customer is really bad coding. Meaning their sales team is generating lots of pipeline and there's lots of revenue out there, but we're not necessarily coding it back to marketing activities. So, that's one possible scenario.
Another more likely scenario is that this particular partner is going after net new customers. Which we would expect to have a lower marketing close rate. And, in aggregate, it's working really well. Because they've been generating net new customers year over year, they're going back, their expanding accounts. That feels great.
A more negative way to interpret that could be that maybe there's a lot of channel shift. So, if we are not generating the number through marketing where's the revenue coming from? Well in some cases business can be moved from your direct team, over to your channel team. And you're not increasing anything, you're just moving it from one channel to another. That might boost that number up there. So, that's something we want to look at as well.
Higher Margins & Higher Values Offerings
Okay, now let's look at partner number 3. Partner 3 the numbers are the same as partner 2. Our revenue is lower so we think in comparison of these two, we want to invest more in partner 2 then partner 3. The growth rate is the same right, so we've taken that out. The only thing that's different so far is the revenues, so let’s invest more partner 2. But then we go into product mix and many of us have multiple products and services with different margin amounts. Partner 3 is selling higher margin, in theory higher value offerings then partner 2. And, this two times margin at the same growth rate, on the same sale is much more profit for you.
So it will indicate that partner 3 of the 3 is actually the best one to invest in. In terms of where you're going to get the financial results from. So that's one of the other ways in which we're going to dive a little bit deeper into the numbers.
Install Base & Channel Shift
Finally, let's take a look at partner 4. Partner 4 is one where all the numbers line of really nice. We've got decent pipeline at 40x, we've got good revenue at 10x, we've got a 30% growth rate and we've got to 2y margin. So two times what the standard partners is doing. So everything looks good, but where could we go wrong with this partner, we're can we miss interpret the results from this partner?
Well, what if this entire number was coming from install base marketing and this entire number was coming channel shift? That's a scenario that I have seen exist where you're going to get an installed base number here and a channel shift number here, everyone things we're doing great. But in aggregate we're not growing, you’re not growing your business, your partner's numbers look great, your marketing numbers look great, but the numbers when they roll up end up having a bad scenario.
Channel Marketing Data, Business Impact, & Lifetime Value
Okay, so we dove deep into a few partners here, there are three key takeaways that we want you to leave this video with.
Number 1 make sure your team dives deep into the numbers. Don't get an incorrect conclusion by looking at simplistic numbers like pipeline and revenue. These are very important, but we want to dive a lot deeper just those two numbers, though.
Number 2 we want to understand the marketing and channel marketing has a strong ability to impact the entire business, not just generate marketing oriented revenue. We can do things for marketing perspective to help grow revenue. As an example maybe we're building great awareness in accounts that our sales team is already trying to progress. Maybe we are providing great materials that help enable the sales team to progress and close deals. Those are examples of things that we can do to help impact total revenue growth that may not necessarily tie revenue to a campaign.
And then 3rd and finally, is we want to make sure you pay close attention to the lifetime value of a customer. So in this scenario if we are going after some net new customers and let's say we're offering cloud or a SaaS offering, or something that needs to be regularly upgraded or added to. Then that first customer may end up having a lot bigger value down the road then these numbers would even indicate on their own.
We hope you enjoyed our session today on channel marketing strategy measuring and analyzing results. And, we look forward to talking to you and our next video. Thanks.
David is a regular contributer to the TSL Marketing Blog MarketNow. You can read David's articles by clicking the link.